Tax breaks for North Sea oil sector to create 700 jobs

New incentive scheme for North Sea oil development projects introduced as part of the Budget statement aims to encourage job creation.

Introduced by Chancellor George Osborne, the new scheme will allow companies a £200m tax relief for every £1bn spent on high pressure, high temperature (HPHT) fields development.

According to the Treasury, two major oil and gas producers - Maersk Oil and BG Group - have announced that the allowance will help enable the development of two new projects, which will lead to investment of £6bn across new fields, creating at least 700 new jobs.

Further 8000 positions will open in the supply chain, the UK government believes. These jobs will be spread across the country, with about half likely to be in Scotland.

"The proposed HPHT allowance provides a welcome boost to new and challenging projects and can contribute to energy security, jobs and the economy,” said Maersk Oil chief executive Jakob Thomasen.

"Importantly, it can also help to stimulate a new generation of North Sea exploration."

Andy Samuel, managing director of BG Group's European upstream business, said: "BG Group welcomes the new proposals which improve the prospect of the Jackdaw gas discovery being developed.

"If approved, Jackdaw would make a significant contribution to UK gas security of supply, support thousands of UK-based engineering and construction jobs and help develop highly technical skills for many UK companies."

HPHT fields have been given a new allowance because exploration wells in these fields are more technically difficult and expensive to drill.

The gas produced from these new fields could cover 10 per cent of the UK's gas demand when operating at peak rate, officials estimate.

The new HPHT allowance builds on recommendations from former oil industry boss Sir Ian Wood, who called for maximising economic production of oil and gas.

Mr Osborne said: "Backing businesses who in turn create jobs is part of our long term plan to fix the economy.

"The Government's continued support for the oil and gas industry has led to billions of pounds of investment, and tens of thousands of jobs across the country."

His coalition colleague, Liberal Democrat MP and Chief Secretary to the Treasury Danny Alexander, will open Maersk Oil's new offices in Aberdeen today.